Debt matters, no matter what the Keynesian groupthink suggests(Video) Jeffrey Sachs breaks down some of the serious errors in Paul Krugman's argument that it doesn't matter how the government spends money in a time of macroeconomic slowdown, as long as it keeps on spending for the purpose of spending in its own right. Krugman's analysis is fatally flawed; suppose, for instance, that instead of talking about dollars we were talking about hours of labor. This isn't an unfair characterization, since for every person, we can find some exchange rate between dollars and work.
■ So if we found ourselves in a period of reduced activity (imagine, if you will, that the "economy" is twenty shipwreck survivors on a deserted island, and this "recession" is simply everyone choosing to lie around in hammocks), and our intention were to improve our standard of living (which, after all, is the only point of having an economy -- deserted island or otherwise), we would be idiots if we could not see the difference between causing people to spend an hour in productive work and an hour engaging in unproductive work. On the desert island, there would be an enormous difference between an hour spent standing on the beach naming the passing whales and an hour spent retrieving coconuts.
■ In our daily lives, there's a clear and meaningful difference between spending three minutes brushing and flossing one's teeth and three minutes spent counting the creases in a window curtain. There most certainly is a difference between productive and unproductive spending, and between productive and unproductive work, and between productive and unproductive investment. Arguing otherwise is fatuous at best, and deliberately wasteful at worst. And it's ironic that Keynesians, tending to be a left-of-center group, are willfully disinterested in the productivity of spending when it comes to the public purse, when they can be counted upon to recognize so quickly that behavior like high-frequency trading in the stock market is so phenomenally unproductive.